2023 (6) TMI 1281 - AT - Income Tax

Income tax demands post approval of resolution plan - treatment to remaining demands and liabilities consequent to the NCLT approved Resolution Plan - HELD THAT - As decided in Ghanshyam Mishra Sons Pvt. Ltd. Vs. Edelweiss Asset Reconstruction Company Ltd. 2021 (4) TMI 613 - SUPREME COURT NCLT order approving the Resolution Plan is binding upon the Central Government including the statutory authorities like the Income-tax Department and all claims pertaining to the period prior to the date of order of NCLT stand extinguished. Thus statutory demands of the Revenue stand extinguished consequent to approval of Resolution Plan and vesting of the Management of the company in the hands of Successful Resolution Applicant. The provision of subsection (1) of Section 31 of the IBC and judgment of Hon ble Supreme Court relied upon by the learned AR leave no doubt that all the claims of Revenue for the period prior to institution of CIRP stand extinguished. Moreover, in the case in hand even demands of Department have been considered, adjudicated and payments have been made to the Income-tax Department consequent to the Resolution Plan. Consequently, appeals of Revenue are left with no merit and the same are dismissed.

Summary

Issues Involved:
The Revenue's appeal against separate orders passed by the Commissioner of Income Tax (Appeals) for A.Y. 2008-09, 2009-10, 2011-12, and 2014-15, common issues involving adjudication in all appeals.

Issue 1: Insolvency and Bankruptcy Code (IBC) Proceedings

The company faced proceedings under the Insolvency and Bankruptcy Code, 2016, and is now under the Successful Resolution Applicant (SRA). Assessment orders for the relevant years were passed before the moratorium order under IBC became effective. The Resolution Plan was approved by the National Company Law Tribunal, extinguishing claims of Revenue for the period prior to the institution of Corporate Insolvency Resolution Process (CIRP).

Issue 2: Payment of Outstanding Dues

The claim of Revenue as operational creditors for outstanding dues was submitted, and a Resolution Plan was approved by the NCLT in favor of the SRA. Payments were made to the Income-tax Department in partial and full settlement of outstanding dues. The judgment of the Hon'ble Supreme Court was relied upon to establish that NCLT's order approving the Resolution Plan extinguishes all claims prior to its date.

Decision:
The Bench concluded that the statutory demands of Revenue stand extinguished post-approval of the Resolution Plan and transfer of management to the SRA. Citing Section 31 of the IBC and the Supreme Court's judgment, it was determined that all Revenue claims for the period before CIRP initiation are extinguished. As all demands of the Department were considered, adjudicated, and payments made in accordance with the Resolution Plan, the appeals of Revenue were found to lack merit and were dismissed.